Home loan competition growing as AMP cuts rates

AMP, a second-tier mortgage lender, has cut home loan interest rates in a sign that borrowers are benefiting from a return to competition in the mortgage market.

The lender is dropping its basic mortgage rate for new homebuyers by ten percentage points to 6.24 per cent and is "hopeful we will be further able to reduce our rates", the Daily Telegraph reported.

The newspaper suggested that the move is a strong indication that the global financial crisis has not wiped out smaller lenders or allowed the major banks to monopolise the home loan market.

In addition, it noted that the federal government is currently considering plans that would make it easier for Aussies to compare home loans and switch lenders.

AMP managing director Craig Dunn said: "This reduction in interest rates has only been possible because of the improvement to the securitisation markets flowing on from the government’s support."

The announcement supports the findings of a report by the Herald Sun earlier this month which claimed that a range of smaller lenders are set to take on the major banks in the home loan market this year.

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